Sunday, July 22, 2001
P&G hopes ThermaCare is a blockbuster
New heat wrap coming in January
By Cliff Peale
The Cincinnati Enquirer
Seeking its piece of the growing market for back-pain relief with the potential consumers including its president Procter & Gamble Co. says it will roll out its ThermaCare thermal heat wrap in stores across the country in January.
P&G president and chief executive A.G. Lafley touted the product to Wall Street analysts in June, noting that it had already helped his chronic bad back.
The Cincinnati-based company will spend $90 million on marketing next year alone, and expects sales to easily top $100 million.
Mr. Lafley is not the only high-profile user. The Cincinnati Reds and several professional golfers already are using ThermaCare.
There really isn't anything like it, said Brian Niccol, brand manager. It's portable pain relief.
Hope is running high that ThermaCare could be among the next generation of P&G blockbusters, following Crest Whitestrips this year.
As products such as Tide, Pampers and Crest face increasing competition in a saturated market, P&G needs those kinds of blockbusters even more to maintain its profit margins and stock price.
If it reaches $200 million in first-year sales, ThermaCare would be among the highest-grossing new product launches of the past decade.
You've always got to be planting seeds, said Rita Freedman, an analyst who studies P&G at PNC Advisors. Their focus seems to be on getting the megabrands back on track, but they hope these other products will be the Tides of the future.
P&G officials believe ThermaCare will add to a pain-relief market, driven by aging baby boomers, that already totals about $3.3 billion in annual sales. In presentations to retailers, they said the $6.99 retail price will produce 25 percent profit margins, well above other pain relievers.
In focus groups, 80 percent of consumers who have tried ThermaCare said they would buy it, while 87 percent of doctors said they would recommend it to patients.
Simply by opening the pouch, a user gets eight hours of 104-degree heat, with a consistency provided by technology from P&G's diaper division, said Tom Blinn, vice president of P&G's global personal health care division.
It's warm enough to deliver pain relief and muscle relaxation, but not warm enough to burn, he said.
Greg Lynn, the Reds' head trainer, said several players are using ThermaCare in the dugout, on buses or planes or even, in some cases, on the field.
What was really pleasantly surprising is that it sustains its heat, Mr. Lynn said. We found that to be true.
That has P&G marketers excited, and they are trying to convince retailers such as Wal-Mart and Kroger to put the product on shelves with daily staples such as Tylenol and Aspirin, instead of other products such as heat rubs and ankle braces.
The company makes ThermaCare in Albany, Ga., and test-marketed it in 1998 in Midland, Texas, and Eau Claire, Wis. It also has sold some ThermaCare products over the Internet.
It will concentrate on U.S. sales the first year.
The brand includes four categories: large back wrap, a smaller back wrap, neck-to-arm and menstrual cramps.
ThermaCare is only the latest in a line of new P&G products that have created a new subcategory. They include Swiffer cleaner, Dryel home dry-cleaning and Crest Whitestrips.
P&G unveiled Whitestrips last year to great fanfare and they have reached the goal of $200 million in first-year sales, a P&G spokesman said.
ThermaCare should add to pain-relief sales without stealing customers from products such as aspirin, Mr. Niccol said. That could help P&G get the shelf placement it wants.
At the end of the day, no retailers wants to walk away from incremental sales on a $3 billion category, he said.
Officials from Cincinnati's Kroger Co., one of the nation's biggest supermarket operators, said they had talked to P&G about ThermaCare but had not decided on specific placements.
Procter has that tremendous distribution system, said Bill Steele, an analyst at Banc of America Securities. They're better than most others at launching new products.
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